The Economy Unites Us: What’s wrong
with the economy and how we can fix it

By
Margaret Flowers and Kevin Zeese

April 09, 2013 "Information
Clearing House" - This article is based
on a talk that we gave at the Maine Peoples Budget
conference at the University of Maine in Orono. It was a
sponsored by the Maine Alliance for the Common Good, a
coalition of organizations that work on different issues and
recognize that all of their issues are connected. They are
focused on the current budget cuts and what they can do to
create an economy that serves and protects people and the
planet.

In the
presentation, we described the current economic situation
and the direction that the economy is headed. We outlined a
strategy to shift economic and political power to people and
create a democratized economy so that people have more
control over the economy and so that the economy benefits
more people. This will reduce the wealth divide and start to
meet more people’s basic needs.

Democratized economic institutions are being put in place
throughout the world and support for a democratized economy
is growing within the US. Given the current risks for
another recession or perhaps another crash in the US, these
systems may serve as protection from increased poverty that
would otherwise be the result.

This
is a broad overview and we did not include some important
topics such as debt and lack of savings and retirement
security for many. But, we hope this will help to frame the
current situation and what we can do about it.

Slide 1: Overall, the US grows wealthier
every year. This trend has been
fairly consistent over the past 200 years except for the
period around the depression and WWII. Manufacturing output
in the US continues to grow too despite low levels of
manufacturing employment. Manufacturing is changing in the
US due to increased use of technology which replaces
workers.

Slide 2:
And corporate profits continue to grow. Corporate profits are rising dramatically
again following the economic crash in 2008. Of all of the
presidents, Obama has been the best for Wall Street. Average
annual profit growth during Obama’s presidency is nearly
80%. Under the next closest president, Harding, there was an
average annual growth of less than 20%.

Slide 3:
But employment has fallen.
Employment took a precipitous drop and remains at a fairly
steady level following the 2008 crash. This chart does not
reflect the number of people who have given up on looking
for a job, nor does it reflect the number of people who are
underemployed. When these factors are included, the actual
unemployment is closer to 49%. See
http://itsoureconomy.us/2012/08/the-real-unemployment-rate-in-the-u-s/

Slide 4:
Over the past four decades, income has only risen
significantly for the top 1%. The
charts show that income has only risen for the top 1% and
top 20% since 1979, and there are wide disparities in the
degree of growth. For the bottom 80%, income has fallen.

Slide 5:
Most of us are still in a recession. Since the economic crash of 2008, profits in
the financial sector have returned to previous high levels.
From 2009 to 2011, average real income per family grew
modestly by 1.7%, but the gains were very uneven. Incomes of
the top 1% grew by 11.2% while incomes of the bottom 99%
shrunk by 0.4%. Hence, the top 1% captured 121% of the
income gains in the first two years of the recovery. See
http://itsoureconomy.us/2013/02/obama-recovery-the-rich-get-richer-but-everyone-else-gets-poorer/.

Slide 6:
Big business and the wealthy were taxed at rates as high as
92% in the mid-20th century. In reality, taxes this high were not paid
because CEOs took lower salaries and re-invested profits in
their businesses which built the economy. Currently, because
of tax havens and corporate tax loopholes, some of the
largest corporations pay no taxes, indeed some receive large
tax refunds, and the wealthy pay a much lower tax rate on
income that is derived from investments. The first chart
shows the actual tax rates paid by the 1% and 0.1%. The
trends can be compared to the second chart which shows the
change in share of total income.

Slide 7:
As a result of all of the above, wealth inequality is
growing in the US. The Gini
coefficient is a measure of wealth inequality; the higher it
is, the greater the inequality. The chart on the left shows
that it has been rising steadily since the late 1960s with
spikes in the early 1990’s and following the 2008 economic
crash. In addition, the chart on the right shows that
labor’s share of the GDP has fallen sharply.

Slide 8: This
Harvard study showed that wealth distribution in the US is
very far from the ideal and what most people think it is.

Slide 9: A
small number of financial and transnational corporations
control a large part of the global wealth. Through their influence over the political
process and their control over resources, jobs and capital,
these corporations are currently in power. And they are
seeking greater power through the TransPacific Partnership
which will give transnational corporations power over
sovereign nations. We think of it as a global corporate
coup. See
http://www.flushthetpp.org/ for more information.

Slide 10:
The US is heading in the same direction as many countries in
the EU and the UK. Austerity
measures in a fragile and struggling economy will create a
recession.A more effective response to the economy
would be to increase taxes on the wealthy, create full
employment, strengthen social insurances and regulate
capital. Instead, we are seeing false crises and debates
that provide cover for increased cuts to social programs and
other austerity measures. Emphasis is misplaced on the
deficit instead of on the wealth divide. The chart shows GDP
rose after the New Deal and fell during a recession that
ensued when FDR cut social spending.

Slide 11:
There are evidence-based solutions to every crisis that we
face. And supermajorities of
people support these solutions, but Congress and the White
House are going in the opposite direction. These solutions
are not even allowed into the national conversation. This is
why we believe that people as a group would make better
decisions than those in power.

Slide 12:
When discussing solutions, we should not limit ourselves to
what is “on the table.” And here
are three principles that are essential for success. The
first is to be independent of political party in our agenda.
If we tie our agenda to a particular party, then we are set
up for compromise. We must be clear about what we are
demanding so that we cannot be confused by partial or false
solutions. And we must be uncompromising on the fundamentals
so that we don’t accept non-solutions.

Slide 13:
We can shift power to the people.
It has happened before and there is empirical evidence of
what works. We propose a two-pronged approach of
protesting what we
oppose to expose it and try to stop it while
creating alternative systems to replace what currently
exists. More time and energy should be spent on building new
systems.

Slide 14:
When the Super Committee was meeting in Washington in 2011,
we protested the hearings and held our own Super Committee
hearing. We brought in experts on
taxation, military spending, jobs, healthcare and more and
we asked them to propose solutions based on the evidence of
what works. From that, we wrote our own
deficit proposal.

Slide 15:
We are in a “Great Turning.” The
global society is shifting from one that is competitive and
that exploits and destroys the Earth to one that is based on
cooperation and sustainability. This is already happening.
We have an opportunity to nourish this turning and create
alternative systems that are life-sustaining. We can
organize based on solidarity, cooperation, sustainability
and democracy.

Slides 16
to 25: A new economy is rising around the world and within
the US. We can build this new
economy within the Capitalist economy so that it arises and
replaces Capitalism. Some call it a Solidarity Economy We
call it a Democratized Economy because it is based on
greater control of the economy by people and greater
equality and benefit for people. Here is a brief outline of
the new economy. It is not exhaustive. There is more
information on our website,
ItsOurEconomy.us. Use
the search box on the website to find more information on
specific topics. You may also want to read the “Occupy
G8 Peoples’ Summit Report” which provides more
information and links to resources.

We published the
power point on It’s Our Economy,
see here, so that it can be downloaded and others can
use it in their communities. If you have any questions about
the charts please contact us at ItsOurEconomy.US@gmail.com.
We encourage you to share this widely so people can
understand the economic situation and how to create an
economy that serves all of us.

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